Costs In Derivative Actions

Derivative Actions Defined

A derivative action occurs where a member of a company, usually a minority shareholder, pursues a cause of action on behalf of the company. S184(c) of the BVI Business Companies Act 2004 (BCA) provides that a member of a company can apply for leave to (i) bring proceedings in the name of and on behalf of the company; and (ii) intervene in proceedings to which the company is a party for the purpose of continuing, defending or discontinuing proceedings on behalf of the company.

It is only under this section that members of the company are permitted to bring an action on behalf of the company. In all other circumstances the position is that the company is the proper claimant to sue in relation to its own causes of action.